Did not the committee receive evidence in 1972 that the reason to vest the penalty power in the FMC was uniformity of treatment of these cases, rather than have five different types of penalties and actions brought throughout the various U.S. district courts, it could be handled on a uniform basis by the Federal Maritime Commission? Mr. KEENEY. Yes.

But, Mr. Chairman, we handled it-we have not used that provision.

Mr. MCCLOSKEY. Do you intend to use it now against Sea-Land? Mr. KEENEY. We reserve the right to use it in an aggravated situation.

Mr. MCCLOSKEY. My points is this, Mr. Keeney. The reason this is extremely relevant to what Congress does is if we pass it apparently over the opposition of the administration, it will be landmark legislation. I cannot understand why in the 2 years now since Sea-Land disclosed the information to the FMC, the Justice Department has not decided whether or not to bring a criminal conspiracy charge.

If that is the case, then every foreign carrier that FMC is investigating and indeed every U.S. carrier must be operating under the gun and are fearful that some sets of facts, even if fully disclosed to FMC, could result in a criminal charge.

Mr. KEENEY. The investigation you are referring to involved a lot more things that the particular violation by particular companies. There are a lot of facets to the matter, and unfortunately the thing is just coming to fruition, Mr. McCloskey.

Mr. MCCLOSKEY. Knowing the timing of that decision would be helpful. For example, why can't we get the kind of legal opinion given Congress by the Attorney General on the Panama Canal treaties, which certainly did not require any greater study than this case? An opinion from the Attorney General about the use of this statute would enable Congress to consider it squarely.

The only thing we know is you have taken 2 years to study one case, and you still have not made a decision.

Mr. KEENEY. There is more than one case.

We have more than one case under consideration in this area.
Mr. MCCLOSKEY. Regarding illegal rebating?

Mr. KEENEY. Yes.

Mr. MCCLOSKEY. The problem is that any question I ask gets into questions of prosecutorial discretion and ordinarily Congress should not make those inquiries. If one company like Sea-Land has cooperated and one has not, do you give weight to that fact when you decide whether you are going to press criminal charges of defrauding the Government?

Mr. KEENEY. Yes; we do.

The CHAIRMAN. Will the gentleman yield?

Give weight as to the magnitude of the rebating?

Mr. KEENEY. We give weight to magnitude of rebating, whether cooperation or noncooperation of the company involved, all of these factors, Mr. Chairman.

The magnitude of rebating might in a particular situation be dispositive, if we are dealing with the diminimus amounts, as compared to millions of dollars.

The CHAIRMAN. How about hundreds of millions of dollars?
Mr. KEENEY. That would have to be a factor to weigh.

The CHAIRMAN. Mr. Emery.

Mr. EMERY. No questions.

The CHAIRMAN. Mr. Trible.

Mr. TRIBLE. No questions.

The CHAIRMAN. Any further questions?

Mr. MCCLOSKEY. Mr. Chairman, might I ask a few more?
The CHAIRMAN. Go right ahead.

Mr. MCCLOSKEY. Mr. Bank, I do not want to ask the Justice Department questions about a criminal conspiracy investigation now ongoing before a grand jury in Washington regarding the North Atlantic conferences. But that matter has come up in your negotiations with foreign nations, has it not?

Mr. BANK. It is a matter of discussion; yes.

Mr. MCCLOSKEY. Can you, without revealing the specifics of ongoing negotiations, discuss the impact of grand jury proceedings in Washington on your negotiations trying to get foreign governments to permit their nationals to cooperate with the U.S. authorities?

Mr. BANK. Yes. It is a serious aspect of these discussions. There is a tendency, of course, for foreign shipping lines and foreign government representatives to merge the issues, and to see them as the overall policy of the U.S. Government against foreign operators.

We have pointed out to them, however, the fact that this case, this ongoing case, is an individual case, and does not necessarily reflect overall policy decisions of the U.S. Government.

I recognize, Mr. McCloskey, the area to which you are referring in regard to earlier questions to Justice Department witnesses here. We, too, have the same questions which you have raised and we understand these problems. In fact, under current cases there is no restraint on the Justice Department or any of the other prosecutorial agencies of the United States to use information that is obtained, for example, by the Federal Maritime Commission during one of its fact finding procedures, in future prosecution in other areas.

Now these foreign governments and government representatives to whom we have spoken and with whom we have had negotiations, understand this. They understand also, as I pointed out earlier, that the State Department cannot, even for foreign policy reasons dictate to the Justice Department or anybody else, whether they should or should not prosecute.

But these foreign representatives also recognize, as our colleagues from the Justice Department have just pointed out, that various factors are taken into account by the Justice Department in deciding whether to prosecute. These include: cooperation, timeliness, the extent of rebating involved, et cetera.

What is taken into account is an important thing, and in our own discussions it is a factor.

Mr. MCCLOSKEY. The difficulty I have with your testimony is that despite it being a factor in your negotiations with foreign nations, you ask us to defer passing a measure with Draconian aspects because it would hamper your negotiations. Why should this committee

wait for negotiations to be fruitful when those negotiations have no chance of being successful so long as prosecutorial discretion remains in the Justice Department?

Have I stated that clearly?

Mr. BANK. I think you have.

The point is, we do not feel there is no chance of success.

There are chances of success. Of course the existing situation with regard to current law and the possibility of Justice prosecution still

exists.

It will be dealt with however on a case-by-case basis through the Federal Maritime Commission, and the Justice Department, in trying to resolve these cases.

Of course, there is a problem, Mr. McCloskey, when it comes to, the wide range of possible prosecutorial action by the U.S. Government. We do not promise at the outset of negotiations full immunity for full cooperation.

Mr. MCCLOSKEY. In a recent conversation with a group of foreignshipping company executives, who were very concerned about the course of U.S. policy, it was indicated that it is becoming almost impossible to deal in U.S. trades, because so much time has to be spent with their lawyers. I can understand that after hearing this discussion.

If I were a lawyer for 1 of the 27 companies under investigation and I heard the testimony today that after a year of study the Justice Department has not resolved whether or not to criminally prosecute the one company which has fully cooperated with the FMC, I do not know how I could advise my client to cooperate with FMC.

In fact, it raises the question of whether the statement given the FMC, which later subjects you to criminal prosecution at the Justice Department's discretion based on yet undetermined criteria, comes within the confession protections of the Constitution?

Last time we were here I asked the FMC lawyers to get an answer. But in view of what Justice Department is saying, I want to hear from FMC whether when they ask for cooperation, they advise a person in advance that the answers may someday be used for criminal prosecution.

Can you comment on that, Mr. Keeney?

Mr. KEENEY. I might suggest, Mr. McCloskey, that there is a technique to handle that sort of thing.

Mr. MCCLOSKEY. I would love to hear about the technique.
But what about the question?

When the FMC investigated Sea-Land, were they under some obligation to advise Sea-Land that their cooperation with FMC might subject them to criminal prosecution?

Mr. KEENEY. Well, as long as there is existing criminal statutes, the counsel for the line should be aware of the fact that the answers I could subject them to criminal

Mr. MCCLOSKEY. Counsel might, but what about the obligation of the FMC?

They are investigating 20 shipping companies.

Mr. KEENEY. The appropriate thing would be to advise them that information that they develop would be available to the Department of Justice.

Mr. MCCLOSKEY. If they fail to do that, would there later be a possibility of dismissing the criminal case?

Mr. KEENEY. I do not think it is a Miranda violation.

Mr. MCCLOSKEY. You did not think there is any affirmative obligation on FMC when dealing with the shipping company under investigation to advise them they might be subject to criminal prosecution?

Mr. KEENEY. I would say that a better practice would be to advise them.

I do not see any legal problem that would ensue unless they were affirmatively misled.

Mr. MCCLOSKEY. Now you can go back to your technique.

Mr. KEENEY. If somebody has a problem of this nature, and we do it all the time in a criminal area, a lawyer comes in and says, on this hypothetical set of facts what would be your disposition, and I am sure this has been done with the Maritime Commission. And I see no reason why it cannot be done with the Maritime Commission and its binding on anyone as long as it is put in hypothetical terms, and there is no admission made by anybody.

They can, in effect, if the Maritime Commission deems it appropriate, get some sort of advisory opinion.

Mr. MCCLOSKEY. Counsel has called to my attention a letter we received from the Federal Maritime Commission dated November 28, 1977, from Mr. Ingolia. He states:

The Commission's present investigation of rebating practices, carriers, and shippers is involving only the shipping activities dealing with civil penalty sanctions.

Therefore, the need to what will protect against self-incrimination as far as provisions are concerned will not in our judgment be called into play.

You say it would have been better practice to give the warning? Mr. KEENEY. That is a personal judgment, Mr. McCloskey. Maybe they were suffering from the same problem.

They had not focused on the possibility of a conspiracy to defraud. Mr. MCCLOSKEY. Let me read you something else.

This is a quote from the letter which Chairman Murphy wrote to Attorney General Bell. He states as follows:

The Chairman of the Federal Maritime Commission recently testified it was his personal feeling that the antitrust division of the Department of Justice does not like and is unwilling to accept the Shipping Act as the law of the land.

Would you concur with that?

Mr. KEENEY. Mr. McCloskey, I am not competent

Mr. MCCLOSKEY. Who in the Justice Department can?

Mr. KEENEY. I am a criminal lawyer

Mr. MCCLOSKEY. Who should we call before this committee to give an opinion about whether the Antitrust Division of the Department of Justice does not like and is unwilling to accept the Shipping Act as the law of the land?

Mr. KEENEY. I came here with respect to answering questions concerning criminal provisions

The CHAIRMAN. We had Mr. Flexner of the Antitrust Division of Justice, who is the logical person to respond to that and you can certainly communicate with him if you like.

He was already here as a witness. He commented at great length in that area.

Mr. MCCLOSKEY. Let me ask about another comment which Mr. Ingolia made in the letter.

He said, The law is not completely clear on whether shippers and carriers engaged in the ordinary rebate situation could be convicted of a conspiracy.

Now, that is a square difference of opinion.

The FMC is making its investigation with a view that the law is unclear and the Justice Department is testifying today they want to reserve the right to criminally prosecute.

Mr. KEENEY. That language is not clear. I do not know if they pass in that sentence on whether or not there might be a violation. They are talking about ultimate conviction.

Mr. MCCLOSKEY. That is lawyers' quibbling, is it not?

You do not bring an action unless you believe in your heart you are going to obtain a conviction?

Mr. KEENEY. That is normal, a normal test.

Mr. MCCLOSKEY. If it is unclear to FMC, yet clear to you, we then have a real ambiguity which Congress must clear up. Would you not agree?

Mr. KEENEY. Well, I do not know that the FMC was addressing the problem that I am primarily addressing here today, namely, conspiracy to defraud the United States, Mr. McCloskey.

Mr. MCCLOSKEY. But aren't you urging that Sea-Land be subject to a criminal conspiracy charge?

Mr. KEENEY. Mr. McCloskey, I am not urging anything with respect to Sea-Land.

Sea-Land is a matter that is currently before us, and we are considering it. I have not gone into it in any great detail. I am not in a position to comment on any detail with respect to it.

I do not know whether we are going to prosecute it or not. I have no idea at this point.

Mr. MCCLOSKEY. I am glad you put that statement on the record. But let me go back to Mr. Ingolia's comment. The law is not clear on whether shippers or carriers engaged in ordinary rebate situations could be convicted of a conspiracy.

Let us set aside for a moment the aggravated case of conspiracy to defraud. Isn't Mr. Ingolia saying it's unclear whether a conviction of conspiracy to violate the civil rebate section could be obtained? His sentence must be construed to say that.

Mr. KEENEY. I guess you are probably right, Mr. McCloskey. Mr. MCCLOSKEY. You disagree, however. You think the law is clear and has been since 1924.

Mr. KEENEY. Mr. McCloskey, I am going to quibble again. They are using the word "convicted." I assume they use it advisedly. I assume they knew what the law is.